Farmers find Reliance a better deal than mandis

July 23, 2007 08:18 IST

Kartaar Singh, a farmer of Mokha village in Punjab's Kapurthala district, used to travel about 50 km on his scooter to Jalandhar's new sabzi mandi, or wholesale vegetable market, to sell his vegetables every day.

In the last two months, however, he has stopped that daily journey to Jalandhar. He now has a buyer just 8 km from his village that pays him the same wholesale prices.

The buyer of Singh's produce is Reliance Retail, a subsidiary of Mukesh Ambani promoted Reliance Industries. The company has nine collection centres - known as Ranger Farms - to supply its retail outlets in the state.

This private procurement system provides a small but significant indication of the impact of organised retail on India's agrarian economy where middlemen dominate.

Like Singh, a number of farmers visit these Ranger Farms. "Though we get the same price for our vegetables as we do at the mandis, by selling here we save the cost of transporting our produce to mandis," said Kartaar Singh.

Another local said he used to spend Rs 80 on transporting 50 kg of vegetables to the mandis and making the return journey. "That money is now my saving," he added.

For Reliance, these direct purchases preclude the need to pay middlemen who typically take a commission of 3 per cent. These farms are able to buy 1,500 to 2,000 kg of vegetables from farmers every day.

Cash flows are also better managed since farmers are paid the same day, in contrast to the mandis' rolling transactions.

Like ITC's well-documented e-choupal system, the Ranger Farms leverage communication technology to maximise efficiency. Every evening, farmers receive phone calls from these centres on the type and quantity of vegetables that they need to bring the following day.

Reliance has a price monitoring team operating at the Jalandhar mandi. The team regularly updates the collection centres on the wholesale rates for various vegetables. The farmers supplying to Reliance are paid according to these rates.